The effects of patient cost-sharing on health expenditure and health among older people: Heterogeneity across income groups

Hirotaka Kato (), Rei Goto (), Taishi Tsuji () and Katsunori Kondo ()
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Hirotaka Kato: Keio University
Rei Goto: Keio University
Taishi Tsuji: Chiba University
Katsunori Kondo: Chiba University

The European Journal of Health Economics, 2022, vol. 23, issue 5, No 8, 847-861

Abstract: Abstract Despite rapidly rising health expenditure associated with population aging, empirical evidence on the effects of cost-sharing on older people is still limited. This study estimated the effects of cost-sharing on the utilization of healthcare and health among older people, the most intensive users of healthcare. We employed a regression discontinuity design by exploiting a drastic reduction in the coinsurance rate from 30 to 10% at age 70 in Japan. We used large administrative claims data as well as income information at the individual level provided by a municipality. Using the claims data with 1,420,252 person-month observations for health expenditure, we found that reduced cost-sharing modestly increased outpatient expenditure, with an implied price elasticity of – 0.07. When examining the effects of reduced cost-sharing by income, we found that the price elasticities for outpatient expenditure were almost zero, – 0.08, and – 0.11 for lower-, middle-, and higher-income individuals, respectively, suggesting that lower-income individuals do not have more elastic demand for outpatient care compared with other income groups. Using large-scale mail survey data with 3404 observations for self-reported health, we found that the cost-sharing reduction significantly improved self-reported health only among lower-income individuals, but drawing clear conclusions about health outcomes is difficult because of a lack of strong graphical evidence to support health improvement. Our results suggest that varying cost-sharing by income for older people (i.e., smaller cost-sharing for lower-income individuals and larger cost-sharing for higher-income individuals) may reduce health expenditure without compromising health.

Keywords: Health expenditure; Cost-sharing; Older people; Income inequality; Regression discontinuity design (search for similar items in EconPapers)
JEL-codes: I13 I14 I18 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10198-021-01399-6

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